It’s said that success has many fathers, while failure is an orphan. In the modern world of business, that’s not quite true. Increasingly, when things go wrong, CEOs depart, with failure’s paternity quickly ascribed to the boss in the big office.
Is firing the CEO the right thing to do when things go wrong? There is something to be said for this approach. The senior managers of our largest listed firms are well paid - and should be responsible for their organisations' performance. In an age when no-one takes responsibility for anything, firing the boss might send a good signal.
We have recently seen two high profile departures - Bernie Brookes from Myer and Ian Smith from Orica. While the circumstances leading up to their respective departures differ, both were moved on by boards keen to see significant organisational change.
For these two boards, there was no teaching old dogs new tricks.
Can A Leopard Change Its Spots?
This begs a question - can people in senior management change their ways as the circumstances require - or are they captive to their peculiar traits and organisational histories?
Recent research has quite a bit to say about the personality traits of CEOs, the impact these traits have on organisational culture and hence, organisational performance. A recent exemplar of this research suggests strong links. While many of their findings are intuitive (for example, should you seek to grow revenues, you would be best served by a gregarious, assertive and active CEO who would likely engender a more results-orientated culture), they are careful to note that it may be that CEOs' manifestation of their personality are just as important as their actual personality - in other words, CEOs don’t really need to be agreeable, if they can pretend to be!
Pretending to be something that you are not, as CEO, is probably not a good way to engender confidence among the troops, however. Furthermore, it is the antithesis of another buzzword - authenticity. Indeed plenty of evidence exists to suggest that humans' behaviour eventually reverts to personality type. As Ke$ha notes so succinctly - “we r who we r”.
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So, can managers keep their personality, and change their ways? Can they successfully reinvent themselves and distance themselves from past errors? Sadly, the answer is probably not.
There are many reasons for this, but first we can look again at personality. One of the main personality traits of CEOs - successful or otherwise - is conscientiousness. Breaking this down, those who make it to the big office tend to tenaciously pursue their goals. They exhibit single-mindedness and persistence and are, by definition, ambitious.
All of these traits tend to limit the capacity of CEOs to change tack, even when the circumstances require. Indeed, a classic piece by Joel Brockner suggests that CEOs escalate commitment to failing strategies rather admitting that they may have made mistakes. This is exacerbated when CEOs exhibit over-confidence, heavily investing their ego and self esteem in perpetuating decisions that have gone awry.
To Err Is Human, To Forgive Divine
The above discussion emerges out of a view where organisational success comes from the success of one person - the CEO. This, of course, is far too simplistic and probably provides a spurious explanation of why firms succeed and fail.
As is the case with people, organisations are products of their histories and operational environments. CEOs are simply members - albeit important members - of organisations. They should neither shoulder all the blame when things go wrong, nor all the glory when they go right.
A better way for CEOs to operate would tend to rely more on consultation and consensus building. A fundamentally important benefit of consensus building is that organisations as a whole tend to take ownership of decisions - for better or worse. This ownership also builds commitment to strategic decisions - something rare when decisions are imposed by an isolated executive.
The real danger in attributing too much organisational success or failure to the CEO’s personality is that it leads to an abrogation, by those who matter, of their responsibilities. Organisations improve at the coal face - not in the Boardroom.
Organisations who seek a personality type, rather than a leader with wisdom, intellect and a capacity to communicate, are destined to fail. Worse, the search for the next Jack Welch to turn around the company’s problems will lead at best to a pretender - and will preclude many great candidates with real depth and character.
Others would point to the reductionism innate in such an approach. Humans are unique and complex beings - trying to reduce them to certain traits is a recipe for disaster. You might find a hard-nosed change agent - but don’t be surprised if they are also a psychopath.
Finally - appointing a personality rather than a person is a recipe for homogenous organisational leadership in an increasingly diverse world. The “crash through or crash” CEO you think you need will invariably be white, male and out of touch.
About The Authors
John Rice is a Professor of Management at the University of New England Business School. His PhD looked at strategic alliances in mobile telecommunications, and he has other postgraduate degrees in economics, business administration, finance and education.
Nigel Martin is a Senior Lecturer and researcher at the National Centre for Information Systems Research (NCISR) at the Australian National University (ANU), and specialises in the theory and practice of technology strategy, e-security, enterprise systems architecture, and operational business management.